More than 250 investors and stakeholders joined PMG and respected economic, property and investment experts in March to discuss the industry outlook for the year ahead and the factors shaping the economy and investment decisions.
PMG General Manager Investor Relationships Matt McHardy facilitated four panel sessions in Christchurch, Wellington, Auckland and Tauranga, which provided regional and national insights into business and property and investment opportunities for the year ahead.
After enduring high inflation and significant changes in interest rates and commercial real estate values over 2023, this year is expected by many to be a turning point. The overarching theme from the series was that, while we're still navigating a shifting economic climate, we have likely experienced the bottom of the economic cycle, and the top of interest rate hikes. While there’s still some caution around potential rate changes, New Zealand will likely see a slow and steady approach to market recovery.
Other key themes included:
Market dynamics and investment opportunities: The panel touched on current commercial property market dynamics, including rising interest rates and lower valuations in 2023 and resulting opportunities for investment and growth in 2024 and beyond.
They also looked at the current challenges we're seeing in terms of money pushed into foreign investment markets, and the potentially transformative impact of increased investment in New Zealand businesses through foreign investment and pension fund capital.
Economic and monetary policy concerns: During the sessions, the complex role of the Reserve Bank of New Zealand (RBNZ) was a key focus, particularly its ongoing struggle with interest rate decisions amidst rising inflation.
The discussions highlighted the fact that the RBNZ must maintain a delicate balance between the potential risks of prolonged high interest rates and inflation control, and how this influences investment landscapes and the economy.
Growing cost of cash: A common theme across the four events was that cash is no longer the ‘safe’ option it has been over the past year. With most banks already starting to reduce headline rates for Term Deposits, we can expect to see a growing number of investors seeking out higher-yielding investments.
Investment strategies: Home ownership has traditionally been a popular investment option for Kiwis. However, with ownership rates at their lowest since the 1950s, fewer New Zealanders can rely on their home to act as a retirement fund. Alongside this, the wealth gap is widening, and younger generations need access to other assets as a stepping stone to building wealth.
Discussions suggested a more mature approach to using KiwiSaver funds, exploring options beyond listed funds, as well as ways to support Kiwi businesses and building wealth outside of home ownership.
It was encouraging to see a shared sentiment that 2024 is likely to deliver a more positive year for New Zealand’s economy and commercial property market. Savvy investors have an opportunity to act early and put their money to work in an asset class that may be well-positioned to deliver higher yields and growth over the medium to long term.
Disclaimer: The information in this article is of a general nature and was current at March 2024. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013 and does not take your individual circumstances and financial situation into account. PMG does not provide financial advice. Please seek advice from a licenced financial advice provider before making any investment decisions.
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